Restrictions of trade are actions imposed by governments, restricting free trading between organizations [1]. The various forms of restrictions commonly include tariffs, or import duty, and non-tariff restrictions [3]. Non-tariff restrictions include quotas, prohibitions, labeling, embargoes, sanctions, import licensing, arbitrary or fictitious customs claims, preshipment inspections, and other restrictive regulations other than ordinary customs tariffs [2][4][6]. These are commonly considered discriminatory measures [2], with some practices being controversial, such as labeling [6]. Labeling can refer to labels that inform the consumer of the ecological qualities of the product [6]. These labels can be either discriminatory by excluding smaller producers, or promote sustainability by informing consumers [6]. There are non-tariff restrictions that are neutral in nature, due to their aim related to health and environment protection. These restrictions include general sanitary and sanitary restrictions in regards to the health of plants, as well as technical restrictions [2].
Relation to sustainable development goals
Trade is an essential part of food security [2][4]. Reducing discriminatory non-tariff restrictions can lower the costs of trade, giving rise to economic and sustainable development, improving food security [2][4]. Acknowledging the importance of non-discriminatory non-tariff measures, related to health and environmental concerns, could spur sustainable development further [2]. Striking a balance between free trade and non-discriminatory measures is crucial, as discriminatory non-tariffs have been shown to come at a cost, not least for developing countries [2][4].
Historical context
Historically, striking a balance between market liberalization measures and treating food as a commodity that should be protected, has been problematic. The General Agreement on Tariffs and Trade (GATT) was established in 1947 to dismantle trade restrictions in the agricultural market. Some regions, like the US and the European Community, continued to enforce trade restrictions in their agricultural market. This lead to other countries following suit, as their domestic market could not compete with an international market and its subsidized goods. In 1994, during the Uruguay Round, further efforts were made to liberalize the agricultural market, resulting in the Agreement on Agriculture (AoA). The AoA failed to dismantle subsidies introduced by industrialized countries, further cementing the fate of developed countries as price-takers. The Doha Round, as part of the WTO, was introduced in 2001 to address previous issues in the international agricultural markets, disproportionately affecting developing countries. The topic of food security has been a widely contested issue since the Uruguay Round, with opposite sides arguing for liberalization and protecting agricultural markets, respectively. [4]
Liberalization versus sovereignty
The argument for liberalization of agricultural markets is commonly referring to one of three trade theories in regards to market liberalization [4]. Firstly, the comparative advantages of liberalization, which entails that countries specialize in producing goods that they are comparatively inclined to produce, lowering costs, improving access and availability [4]. Secondly, proponents argue that markets should act as a transmission belt, where surplus flows to regions with a deficit, independent of variations in annual variability and fluctuating output [4]. This would also improve sustainability, as regions with a deficit are challenged by a growing population and urbanization [5]. Thirdly, it refers to the negative impacts of market protection policies have on food security, creating superficial shortages, its failure to incentivize and create opportunities [4].
The premise of the liberalization argument relies heavily on assumptions, such as perfect competition and the absence of externalities. It also fails to consider the bargaining power of developing countries. Also, for the argument to have predictive value, it needs to consider the role global value chains have. [4]
The argument for sovereignty emphasizes the importance of national food systems over trade. This argument is commonly referring to three concepts in relation to food trade and food security. Firstly, considering self-sufficiency an integral part of national security. Secondly, a belief that agriculture serves society beyond the scope of other tradable commodities, including ecological services and cultural heritage. Thirdly, the risk that less regulated markets pose, not only for small-scale farmers, but for the public in general, who are subjected to more processed food brought on by the global value chain. [4]
Focusing on self-reliance could increase the risk for supply shocks, as such things occur more frequently in closed markets [4]. Going back to the early era of GATT could potentially make the situation worse for developing countries, as industrialized countries would benefit more from protectionist policies [4]. The assumption that farmers are more interested in trading in the local food markets might be flawed, and the freedom for farmers to choose would likely be preferable [4]. Also, countries that are smaller food producers, face sustainability challenges themselves, and producing more food in such regions would jeopardize sustainability [5].
Examples from Finland
Possible tariffs on foreign imports in the United States could lead to trouble for the Finnish forestry industry [7]. Increased tariffs would lead to a surplus in the European market, affecting Finnish exports negatively [7].
Restrictions of trade are actions imposed by governments, restricting free trading between organizations [1]. The various forms of restrictions commonly include tariffs, or import duty, and non-tariff restrictions [3]. Non-tariff restrictions include quotas, prohibitions, labeling, embargoes, sanctions, import licensing, arbitrary or fictitious customs claims, preshipment inspections, and other restrictive regulations other than ordinary customs tariffs [2][4][6]. These are commonly considered discriminatory measures [2], with some practices being controversial, such as labeling [6]. Labeling can refer to labels that inform the consumer of the ecological qualities of the product [6]. These labels can be either discriminatory by excluding smaller producers, or promote sustainability by informing consumers [6]. There are non-tariff restrictions that are neutral in nature, due to their aim related to health and environment protection. These restrictions include general sanitary and sanitary restrictions in regards to the health of plants, as well as technical restrictions [2].
Relation to sustainable development goals
Trade is an essential part of food security [2][4]. Reducing discriminatory non-tariff restrictions can lower the costs of trade, giving rise to economic and sustainable development, improving food security [2][4]. Acknowledging the importance of non-discriminatory non-tariff measures, related to health and environmental concerns, could spur sustainable development further [2]. Striking a balance between free trade and non-discriminatory measures is crucial, as discriminatory non-tariffs have been shown to come at a cost, not least for developing countries [2][4].
Historical context
Historically, striking a balance between market liberalization measures and treating food as a commodity that should be protected, has been problematic. The General Agreement on Tariffs and Trade (GATT) was established in 1947 to dismantle trade restrictions in the agricultural market. Some regions, like the US and the European Community, continued to enforce trade restrictions in their agricultural market. This lead to other countries following suit, as their domestic market could not compete with an international market and its subsidized goods. In 1994, during the Uruguay Round, further efforts were made to liberalize the agricultural market, resulting in the Agreement on Agriculture (AoA). The AoA failed to dismantle subsidies introduced by industrialized countries, further cementing the fate of developed countries as price-takers. The Doha Round, as part of the WTO, was introduced in 2001 to address previous issues in the international agricultural markets, disproportionately affecting developing countries. The topic of food security has been a widely contested issue since the Uruguay Round, with opposite sides arguing for liberalization and protecting agricultural markets, respectively. [4]
Liberalization versus sovereignty
The argument for liberalization of agricultural markets is commonly referring to one of three trade theories in regards to market liberalization [4]. Firstly, the comparative advantages of liberalization, which entails that countries specialize in producing goods that they are comparatively inclined to produce, lowering costs, improving access and availability [4]. Secondly, proponents argue that markets should act as a transmission belt, where surplus flows to regions with a deficit, independent of variations in annual variability and fluctuating output [4]. This would also improve sustainability, as regions with a deficit are challenged by a growing population and urbanization [5]. Thirdly, it refers to the negative impacts of market protection policies have on food security, creating superficial shortages, its failure to incentivize and create opportunities [4].
The premise of the liberalization argument relies heavily on assumptions, such as perfect competition and the absence of externalities. It also fails to consider the bargaining power of developing countries. Also, for the argument to have predictive value, it needs to consider the role global value chains have. [4]
The argument for sovereignty emphasizes the importance of national food systems over trade. This argument is commonly referring to three concepts in relation to food trade and food security. Firstly, considering self-sufficiency an integral part of national security. Secondly, a belief that agriculture serves society beyond the scope of other tradable commodities, including ecological services and cultural heritage. Thirdly, the risk that less regulated markets pose, not only for small-scale farmers, but for the public in general, who are subjected to more processed food brought on by the global value chain. [4]
Focusing on self-reliance could increase the risk for supply shocks, as such things occur more frequently in closed markets [4]. Going back to the early era of GATT could potentially make the situation worse for developing countries, as industrialized countries would benefit more from protectionist policies [4]. The assumption that farmers are more interested in trading in the local food markets might be flawed, and the freedom for farmers to choose would likely be preferable [4]. Also, countries that are smaller food producers, face sustainability challenges themselves, and producing more food in such regions would jeopardize sustainability [5].
Examples from Finland
Possible tariffs on foreign imports in the United States could lead to trouble for the Finnish forestry industry [7]. Increased tariffs would lead to a surplus in the European market, affecting Finnish exports negatively [7].
External resources
www.wto.org
www.imf.org
www.unescap.org/
http://ec.europa.eu/trade/
www.ictsd.org/
http://hinrichfoundation.com
www.wri.com
Trade restrictions quiz
https://www.goconqr.com/en-US/p/8439556-Trade-restrictions--quizzes
(1) A dictionary of business and management (2016).“Trade barrier”. Available: www.oxfordreference.com/view/10.1093/acref/9780199684984.001.0001/acref-9780199684984 Retrieved 8.2.2017.
(2) UNCTAD (2014). Non Tariff Measures And Sustainable Development Goals: Direct and Indirect linkages. Available: http://unctad.org/en/PublicationsLibrary/presspb2015d9_en.pdf Retrieved 8.2.2017.
(3) A Dictionary of Economics (2017). “Tariff”. Available: www.oxfordreference.com/view/10.1093/acref/9780198759430.001.0001/acref-9780198759430 Retrieved 8.2.2017.
(4) FAO (2015). Food Security and International Trade. Available: www.fao.org/3/a-i5160e.pdf Retrieved 8.2.2017.
(5) YouTube (2015). Next Generation: Feeding the World: Agriculture Trading. Available: www.youtube.com/watch?v=VkKOrb_bg5g Retrieved 8.2.2017.
(6) Labeling https://www.wto.org/english/tratop_e/envir_e/labelling_e.htm
(7) Ministeri Mykkänen Lännen Medialle: Trumpin tullit iskisivät metsäteollisuuteen. Maaseudun Tulevaisuus 2.2.2017. Accessible: www.maaseuduntulevaisuus.fi/talous/ministeri-mykk%C3%A4nen-l%C3%A4nnen-medialle-trumpin-tullit-iskisiv%C3%A4t-mets%C3%A4teollisuuteen-1.177484 Retrieved 15.2.2017.